Buying a home is often the largest financial commitment a New Zealander will ever make. But the purchase price and mortgage repayments are only part of the story. Once the keys are in your hand, a range of ongoing obligations begin — costs that exist independently of whether you have a mortgage, whether you use your property heavily or lightly, and whether the economy is booming or struggling. Council rates, insurance, maintenance, and other running costs are not optional extras. They are fundamental realities of property ownership that, if underestimated or ignored, can turn a manageable mortgage into genuine financial strain. This guide explains what these costs are, why they exist, how they behave over time, and how to plan for them sensibly — so that ownership feels like the solid foundation it should be, rather than a source of constant financial surprise.
Council rates are compulsory charges levied by local councils on all property owners within their district.
Every property in New Zealand — residential, commercial, rural, and vacant land — is subject to rates. They are not optional, not means-tested, and not reducible based on personal financial circumstances. They are an inherent obligation of owning property in New Zealand.
Local councils are responsible for an enormous range of services and infrastructure that make communities function. Rates are the primary mechanism by which councils fund this work.
Every time you drive on a local road, use a public park, or put your rubbish bin out, you are using services funded in part by rates. Rates are the price of participating in a functioning local community.
Many people instinctively compare rates to income tax — both are compulsory charges paid to a government entity. But they function very differently.
The critical difference: Rates are a cost of owning property, not a cost of earning income. They continue regardless of your financial situation. A retiree on a fixed income pays rates just as a highly-paid professional does — based on property value, not ability to pay.
The moment you own property, you accept a set of obligations that cannot be paused, negotiated away, or ignored.
This is one of the most important mental shifts prospective homeowners need to make. Property is not just an asset that sits there growing in value. It is a living obligation — requiring regular payment, maintenance, and attention indefinitely.
Unlike rent — where the landlord bears these obligations — ownership means they are entirely yours.
A common misconception: "Once my mortgage is paid off, I'll have no housing costs." This is false.
Rates continue indefinitely regardless of whether a property has a mortgage. A property owned outright for decades still accumulates annual rates obligations. This is particularly significant for:
The permanence of rates is one reason property ownership requires lifetime financial planning, not just mortgage planning.
Rates are not a fee for specific services you use. They are a contribution to the collective infrastructure and services that make your community — and therefore your property — function and hold value.
You pay rates whether or not you personally use the library, swim at the local pool, or walk in the park. You contribute because these services collectively sustain the community your property exists within. A suburb without functioning roads, water supply, or rubbish collection would be uninhabitable — and uninhabitable properties have no value.
Homeowners have no direct control over these changes. Rates can increase substantially from year to year, and the homeowner receives no individual warning in advance — just a new rates demand that reflects the council's decision.
In New Zealand, rates are partly calculated based on assessed property value. When property values rise — as they have significantly in many NZ regions — rates assessments can rise with them. This creates a scenario where a property owner's asset value has grown, but so has their annual rates obligation, without any corresponding increase in cash income. Asset-rich, cash-flow-stretched ownership is a real and common experience.
Property running costs divide naturally into two categories. Understanding both is essential for accurate budgeting.
These costs arise from owning the property itself, regardless of how it is used or who lives in it.
Fixed ownership costs exist whether the property is occupied or vacant, well-used or barely used. They are the cost of holding the asset.
These costs arise from how the property is lived in.
Usage-based costs can be managed through behaviour — using less, switching providers, insulating to reduce heating costs. Fixed costs cannot.
Home and contents insurance is not an optional expense for property owners — it is a fundamental obligation of responsible ownership.
Insurance premiums are not fixed. They change based on claims experience nationally and locally, changing risk assessments (particularly earthquake and flood risk in NZ), and inflation in rebuild costs. Premiums have risen significantly in many NZ regions in recent years and may continue to do so. Some properties in high-risk areas (coastal, flood-prone, earthquake-prone) face particular premium increases or coverage limitations.
Every property deteriorates over time. Maintenance is not an optional extra — it is the cost of preserving the value and habitability of your asset.
Every component of a house has a finite lifespan. Roofing iron, hot water cylinders, heat pumps, carpets, kitchen cabinetry, external cladding, decking — all will eventually need replacement. The timing is partly predictable (a roof installed decades ago will need replacing within a known range of years) and partly unpredictable (a hot water cylinder can fail at any time). Wise owners plan for this by setting aside funds regularly — not waiting for failure then scrambling for cash.
One of the most important mental models for property ownership is distinguishing between:
The key insight: These costs are inevitable, even if their exact timing is uncertain. Planning for them by setting aside a regular amount every pay period — a property maintenance fund — converts shocking lump-sum costs into manageable ongoing provisions. The cost doesn't disappear by not planning for it; it just arrives as a crisis instead of as a managed expense.
For apartments, townhouses in shared complexes, and retirement village units, body corporate (or owners corporation) levies are compulsory contributions to shared building management costs. These cover building insurance for shared structures, maintenance of common areas, building management fees, and capital works funds for future major repairs. Body corporate levies can be substantial and can increase unexpectedly when major building repairs are required. Prospective buyers must factor them into true ownership cost calculations.
Many NZ councils charge for water separately from general rates — either through a fixed charge per property or metered usage charges. Some areas have historically provided unmetered water, but this is changing in many districts. Understanding how water is charged in your area is an important part of running cost planning.
Landlords who use property managers pay ongoing management fees calculated as a percentage of rent collected. These cover tenant sourcing, rent collection, maintenance coordination, and compliance management. For landlords, this is a real and ongoing cost that reduces net rental income.
Regular pest inspections (particularly for borer, termites in some regions, and rodents) and garden maintenance are ongoing costs that can be easy to overlook but accumulate meaningfully over time.
Underestimating ongoing property costs is one of the most common financial mistakes first-home buyers make — and it can turn the excitement of homeownership into persistent financial stress.
A prudent homeowner calculates true ownership cost as: mortgage repayments + rates + insurance + estimated maintenance provision + body corporate (if applicable) + utilities. Comparing this figure — not just the mortgage — to rental costs gives an honest picture of the financial commitment being made.
Purchase price and ongoing cost are not reliably correlated. A lower purchase price does not guarantee lower running costs — and can often mean the opposite.
The due diligence imperative: Before purchasing any property, getting a comprehensive building inspection and researching insurance costs provides a far clearer picture of true ownership cost than the purchase price alone.
Banks assess mortgage affordability based primarily on income and debt servicing ratios. They do not fully account for ongoing ownership costs in their calculations.
A mortgage that is technically "affordable" based on bank calculations may prove unaffordable in practice once all running costs are factored in. This is why self-assessment of running costs — not just reliance on bank approval — is essential for sustainable homeownership.
The cost structure of property ownership differs significantly depending on whether you own to occupy or to let.
When a rental property is vacant — between tenants, during renovation, or while a dispute is resolved — all fixed ownership costs continue without any rental income to offset them. This is a real financial risk that landlords must plan for.
One of the most overlooked aspects of property planning is that ownership costs do not retire when you do.
New Zealanders who plan their retirement finances must include property running costs in their projections. A property that is paid off by retirement has eliminated the mortgage — but not rates, insurance, or maintenance. These costs must be funded from retirement income indefinitely.
Calculate the true monthly cost of owning a property by dividing all annual fixed costs (rates, insurance) by the months in a year, adding a monthly maintenance provision, and adding mortgage repayments. This full figure — not just the mortgage — is what ownership actually costs each month. It is the only honest basis for assessing affordability.
Set aside a fixed amount every pay period specifically for property maintenance and capital replacement. This fund accumulates over time and is available when maintenance needs arise. The amount should reflect the age, condition, and type of property. Older properties warrant larger provisions. New builds warrant smaller ones — but still require a fund.
Map out known annual obligations on a calendar: rates instalments, insurance renewal, and any regular maintenance contracts. Seeing the full year's known costs at once prevents month-to-month surprise and allows cashflow planning well in advance.
Every maintenance task delayed is not money saved — it is deferred maintenance debt. Like financial debt, it accumulates. A small crack not sealed leads to water ingress. Water ingress leads to rot. Rot leads to structural repairs. The original small cost has become a large one through inaction. Understanding maintenance as debt makes deferral psychologically harder to justify.
Property is often described as a cornerstone of financial security in New Zealand. That security is only real if ownership is sustainable — and sustainability requires understanding the full cost picture.
The difference between a property being a financial asset and a financial burden often comes down not to market conditions — but to whether the owner truly understood and planned for the full cost of ownership from the beginning.
Quiz on Rates and Property Running Costs
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